PIE - Polymer Price Reports

Standard thermoplastics May 2022

Almost all grades tick lower / Increases only for PS, EPS / High inflation, general uncertainty dampen demand / Further decreases already foreseeable for June

PE: The price of C2 fell by EUR 70/t in May. This also paved the way for polyethylene. In some cases, prices came under additional pressure through imports, but not really until the end of the month. European production is, for the most part, running normally and is sufficient to supply the contracted quantities. The logistics problems affecting imports have not yet been overcome; considerable volumes from Asia and the US nevertheless arrived in Europe at the end of May. With all PE types it can be said that end-users are holding back and are being put off by the high prices. For this reason, converters are only buying what they absolutely need. Demand fell significantly in May, with spot prices for PE falling much more strongly than the contract prices. Nevertheless, trading volumes were only marginal. The C2 price for June experienced a rollover. Increased imports are likely to put European prices under further pressure and will probably result in a slight price decline for the market as a whole. The fundamental data from the market do not give any indication of an improvement in demand. Uncertainty, nourished by fears of inflation, continues to suppress the inclination to buy.

PP: What an absurd scenario! After months of “fuel poverty”, propylene producers are now drowning in a sea of their own product, and are frantically searching for tankers – or anything else – to store the surplus in. Not least for that reason, May was no merry month for propylene producers. The contract price for C3 plunged by EUR 65/t to EUR 1,610/t. Rebates for the polymer were even greater. Converters, in any case, had reason to rejoice, as the rebates for many polymer grades were more substantial than those for the feedstock. European capacity sufficed to meet the soft demand, and contracted volumes could be supplied promptly. Imports were still thin, but improvement is in sight for June. From every perspective, demand rises and falls on the back of the automotive industry. As scant impetus came from that corner in May, converters ordered only the bare minimum. A bank holiday near month’s end in parts of Europe also served to diminish buying activity. In a nutshell, there was no momentum at all in the last third of the month. The C3 contract price for June was fixed slightly lower, and this should determine the direction of PP quotations. Demand is expected to remain weak for the foreseeable future and put even more downward pressure on prices. Exceptions are speciality grades and special mixtures specified for OEMs.

PVC: Can it be true? In May, PVC prices fell for the first time in more than two years. The cost of ethylene dropped EUR 70/t, and producers largely passed on part of the decline, which led to a reduction of EUR 35/t for the base material. Despite this, producers improved their margins because they ignored lower energy costs when calculating prices. The continuing tight supply also played into their hands. Compound prices also fell. And for S-PVC (U) and S-PVC (P), the reductions were somewhat smaller than for the base material because higher costs for titanium dioxide and plasticisers countered the declines in PVC. Converters are hoping for further price cuts in June and adjusted their May orders accordingly. Demand is also being suppressed by postponements of building projects, especially in Eastern Europe. At least for June, further price reductions are thus on the cards for PVC despite a rollover for C2. It is still impossible to say whether this is the start of a downward trend or merely a brief dip during a period of record prices. Quotations will at any rate be supported by the effects of the EU’s wide-ranging oil embargo against Russia: the price of crude has already risen and could drag the cost of naphtha and ethylene higher in its wake.

Styrenics: Styrenics prices reacted quite differently to the renewed increase in the styrene reference in May 2022 (up EUR 84/t). In the case of EPS, where the market is generally tight, the SM increase was passed on in full to buyers; in the case of the scarce EPS grey, producers even topped the cost transfer with a margin component. Polystyrene producers, on the other hand, accounted for decreasing energy costs when setting prices, which generally kept premiums below the SM change. Suppliers who had initially targeted higher price increases backed down in the course of the month. Due to high inventories, some distributors even sold volumes of material, particularly of injection moulding materials, at the previous month’s prices. The situation for ABS was more difficult for suppliers. Faced with weak demand and improved supply, producers were often unable to transfer the increased composite costs. Extrusion materials, by contrast, showed a mixed picture of slight ups and downs, while injection moulding grades saw a rollover at best because of surplus volumes in distribution and lower-priced import volumes – most price discussions were closed with slight reductions. Only modest price changes can be expected for June after the styrene reference bucked the trend of previous spot prices by rising another EUR 16/t. While slight premiums could appear for EPS and probably also for PS, ABS is unlikely to go beyond a rollover, considering the restrained demand and probably nearly unchanged composite costs (SM up EUR 16/t, butadiene up EUR 10/t, market observers expect a more or less significant decline for ACN).

PET: The European PET market slumped by a surprisingly large extent in May. Demand in the peak season remained very weak compared to the usual level of business at this time of the year. After the troubles that beset European production at the beginning of the year, things were, for the most part, running normally again last month. To crown it all, considerable quantities of material unexpectedly arrived from Asia. Evidently, a logistics blockage that had built up since the first few weeks and months of the year had abruptly dissolved. At the end of it all, large customers managed to obtain a reduction of around EUR 100/t. Buyers of small and medium-sized quantities also gained significant price cuts in this situation. On the feedstock side, there are signs of pressure building in June because of rising PX prices and a shortage of acetic acid. On the other hand, there is a surplus of MEG, and prices here are expected to fall. European production lines will possibly be operated with slightly reduced output this month. Imports from Asia are evidently arriving in batches, and for June, there is continuing scepticism about deliveries, with delays more or less on the cards. On the demand side, enormous uncertainty prevails, because it is absolutely unclear how inflation and the general instability will affect tourism and the mood of consumers. Understandably, in a situation such as this, all players are continuing to act cautiously. Further large price increases are improbable, but are none the less conceivable. On the other hand, a few small increases would not come as a surprise either. The most likely outcome is a rollover with the occasional reduction.

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